Unravelling the black economy will not be easy

Despite allegations to the contrary, print media does not print just bad news.

I’m sure many of us were pleasantly surprised to read in Tuesday’s Irish Examiner that the black or shadow economy was not as bad as many of us thought. A lot of us would have thought it was rampant, but that is not the case, or at least, it’s not as bad as we thought it was.

Apparently, we have the sixth lowest rate of shadow activity in Europe. It would appear, surprisingly, that we are law-abiding, tax compliant citizens. Now that’s good news and bad news.

Good news, because more folk are tax compliant and paying into the general tax fund helping to pull us out of the hole and paying for the sins of our would-be betters. It is bad news, because it underpins the reasons why our politicians feel enabled to misrepresent their intentions at the hustings, allows them to continuously lie to us with relative impunity and feel that they can continue to impose austerity without feeling much pain themselves, without any kick back from the rest of us. We must appear like putty in their hands, as they mould us and twist us.

Our ancestors are rolling in their graves with frustration at our softness. How the Greek government must envy our ministers and their ability to ride roughshod over Irish citizens.

Still, when you consider that across Europe the taxman is being deprived of an estimated €2.1 trillion per annum, our measly €20bn shadow economy is like a grain of sand on a beach. Mind you, collecting that €20bn as tax could mean that we would not need to borrow from the usurers of Europe and elsewhere. Interestingly, our ability to reduce that much lower is very limited. Conor Langford, vice-president Ireland at Visa Europe, is reported to have stated that electronic payments and other such initiatives could reduce that sum by €2bn, which is not a lot in the scheme of things, but, every little bit helps.

Taxes are never far from our minds, particularly at the moment, with the advent of the property tax. In the last few days, the Revenue Commissioners has said that tens of thousands of people were rushing to sign up, despite there being almost four weeks left to do so for those doing it electronically. We can be fairly sure the main reason for this is not patriotism, but fear. That is fear of the repercussions should they be found out, and found out they would be.

Many of these new taxes are being brought in, not because they are fair, but because the Government needs the money. The fact remains that we continue to borrow over €10bn per annum, putting us in hock for a long time to come.

The fact also remains that most of the private sector believes there is much over-paid and expensive fat at the top of the public sector, and in national and local government, in particular. They also believe that cutting this fat will mean that less will be asked of the rest of us who are suffering for the sins of others.

It is also a fact that many people, particularly the 400,000-plus who are unemployed, are hard up and cannot undertake repairs, never mind upgrade their homes. It is tempting for such folk to have someone do a nixer. They could avoid Vat on both materials and on labour and also get to benefit from the tradesman not paying tax. It does not make it right, but it is understandable.

Equally understandable is the rumoured return of the bartering system.

At least, it’s all putting more money back into the system that might otherwise be kept under the bed and is getting things done. Indeed that’s more than the banks are doing to encourage growth after all the taxpayers of this country have done for them. And yes, greed also plays a part, but not for an awful lot of people.

business@examiner.ie

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